Tax effectiveness of investing in agriculture?

I'm interested in finding out more information on the tax effectiveness of investing in agricultural projects. In particular what makes these investments more tax advantageous than other investments?

There has been a heavy focus from the ATO and the media in regard to non-commercial tax-driven schemes such as agricultural projects. An incentive for getting involved in such projects can be the generous tax deductions. Tax effective investments generally provide tax benefits at the front-end in the form of tax deductions for expenses paid. Tax effective investments include investments such as agricultural, entertainment, franchise and film schemes. With agricultural projects, expenses such as the up-front establishment/management costs and all ongoing costs are tax deductible and can be offset against other taxable income. All proceeds from the sale of the crop are taxable at the grower's marginal rate of tax.

Rather than focusing entirely on tax savings from tax sheltered projects, they're best integrated with other mainstream financial strategies and treated as an investment alternative rather than a tax strategy. The ATO has focused heavily on this sector in recent years, disallowing deductions for investments made in projects considered primarily "tax driven". If you're considering investing in such a project, you can be provided with more certainty by only choosing projects that have an up-to-date product ruling issued by the ATO. You should also seek independent research validating the long-term prospects of the particular project.

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